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Changes in Medicare Costs with the Growth of Hospice Care in Nursing Homes Pedro Gozalo, Ph.D., Michael Plotzke, Ph.D., Vincent Mor, Ph.D., Susan C. Miller, Ph.D., and Joan M. Teno, M.D.

A BS T R AC T BACKGROUND

Nursing home residents’ use of hospice has substantially increased. Whether this increase in hospice use reduces end-of-life expenditures is unknown. METHODS

The expansion of hospice between 2004 and 2009 created a natural experiment, allowing us to conduct a difference-in-differences matched analysis to examine changes in Medicare expenditures in the last year of life that were associated with this expansion. We also assessed intensive care unit (ICU) use in the last 30 days of life and, for patients with advanced dementia, feeding-tube use and hospital transfers within the last 90 days of life. We compared a subset of hospice users from 2009, whose use of hospice was attributed to hospice expansion, with a matched subset of non–hospice users from 2004, who were considered likely to have used hospice had they died in 2009.

From the Center for Gerontology and Healthcare Research and the Department of Health Services, Policy, and Practice, School of Public Health, Brown University (P.G., V.M., S.C.M., J.M.T.), and the Providence Veterans Affairs Medical Center, Health Services Research (V.M.) — all in Providence, RI; and Abt Associates, Cambridge, MA (M.P.). Address reprint requests to Dr. Gozalo at the Center for Gerontology and Health Care Research, Brown University School of Public Health, Box G-S121-6, Providence, RI 02912, or at ­pedro_gozalo@​­brown​.­edu. N Engl J Med 2015;372:1823-31. DOI: 10.1056/NEJMsa1408705 Copyright © 2015 Massachusetts Medical Society.

RESULTS

Of 786,328 nursing home decedents, 27.6% in 2004 and 39.8% in 2009 elected to use hospice. The 2004 and 2009 matched hospice and nonhospice cohorts were similar (mean age, 85 years; 35% male; 25% with cancer). The increase in hospice use was associated with significant decreases in the rates of hospital transfers (2.4 percentage-point reduction), feeding-tube use (1.2 percentage-point reduction), and ICU use (7.1 percentage-point reduction). The mean length of stay in hospice increased from 72.1 days in 2004 to 92.6 days in 2009. Between 2004 and 2009, the expansion of hospice was associated with a mean net increase in Medicare expenditures of $6,761 (95% confidence interval, 6,335 to 7,186), reflecting greater additional spending on hospice care ($10,191) than reduced spending on hospital and other care ($3,430). CONCLUSIONS

The growth in hospice care for nursing home residents was associated with less aggressive care near death but at an overall increase in Medicare expenditures. (Funded by the Centers for Medicare and Medicaid Services and the National Institute on Aging.)

n engl j med 372;19 nejm.org  May 7, 2015

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edicare expenditures for beneficiaries in their last year of life account for a quarter of the annual payments made by Medicare.1 From its inception, hospice has been viewed as respecting patients’ goals of care with no resulting increase — or even with a resulting decrease — in health care expenditures.2-4 Between 2000 and 2012, the percentage of Medicare decedents using hospice doubled (from 23% to 47%)5 and hospice expenditures quintupled (from $2.9 billion to about $15.1 billion),5 which raised budgetary concerns.6,7 This increase was particularly large among persons with noncancer diagnoses and those residing in nursing homes.8 The Medicare Payment Advisory Commission and the Office of Inspector General have expressed concern about hospice providers that may be selectively enrolling nursing home residents with longer hospice stays and less complex care needs, thereby generating higher profit margins.6,7 It is unknown how growth in the number of hospice patients residing in nursing homes has affected health care expenditures. The evidence regarding the relationship between hospice and health care savings is mixed,4,6,9-12 and most studies have had important methodologic limitations.9 An important limitation is that most observational studies are not able to control for differences in preferences for aggressive care. In the present study, we address this limitation in two ways. First, we use mandatory nursing home assessment data that provide a wealth of risk adjusters not available in most other studies, including proxies for patients’ preferences for aggressive care (do-not-resuscitate [DNR] and do-not-hospitalize [DNH] orders). Second, we capitalize on the natural experiment created by the rapid expansion of hospice in the nursing home setting by using a difference-in-differences matching approach. This approach provides better adjustment for confounders than has been used in previous studies.

Me thods Overview and Study Population

An important concern with observational studies is that persons who elect and those who do not elect hospice have different preferences for aggressive care. This concern regarding selection bias and the lack of information on preferences is an 1824

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important threat to the validity of earlier studies that matched hospice users to persons who contemporaneously die without hospice services. Instead of using cross-sectional matching, we used a difference-in-differences cross-temporal matching design. We took advantage of the natural experiment created by the substantial increase in hospice use between 2004 and 2009 and compared a subset of hospice users in 2009, whose use of hospice was attributed to hospice expansion between 2004 and 2009, with a matched subset of nonusers in 2004, who were considered likely to have used hospice had they died in 2009. We studied all 2004 (baseline period) and 2009 nursing home decedents who were 67 years of age or older at death and who had fee-for-service Medicare for the last 2 years of life. We did not include 828 persons (0.1%) whose last nursing home assessment was performed more than 120 days before death. Although the use of data from later years would have been desirable, the nursing home assessment changed in 2010; the new assessment is not comparable and is missing key information, such as DNR and DNH orders. Outcomes

Medicare expenditures in the last year of life9 were based on inpatient, outpatient, postacute, home health, and hospice claims. In addition, carrier-file physician-visit claims for a random 20% sample were used. Expenditures for health care services starting before the last year of life but overlapping with the last year of life were prorated. All expenditures were inflation-adjusted to 2007 prices.13 We also examined claims-based measures that characterized the aggressiveness and quality of end-of-life care. For all patients, we examined admission to an intensive care unit (ICU) in the last 30 days of life. For patients with advanced dementia (those with dementia and a Cognitive Performance Scale [CPS] score of 4, 5, or 6), we examined feeding-tube use in the last 90 days of life and “burdensome transitions” (defined as more than two hospitalizations for any reason or more than one hospitalization for pneumonia, urinary tract infection, dehydration, or sepsis) in the last 90 days of life.14 The CPS score ranges from 0 (intact) to 6 (very severe impairment), with a score of 5 corresponding to a score of 5.1 on the Mini–Mental State Examination (range, 0 to 30; 90 days) and very short (6 months, 12.3%) in 2004 to 92.6 days (median, 21; proportion of hospice users with a length of stay >6 months, 16.7%) in 2009. Each year, approximately 15% of nursing home decedents had cancer, 46% had dementia without cancer, and 10% had both cancer and dementia. Among hospice users, these three rates changed from 18.6%, 46.6%, and 12.5%, respectively, in 2004 to 14.5%, 51.9%, and 12.4% in 2009, reflecting a reduction in the rate of cancer and a similar increase in the rate of dementia cases (Table S1 in the Supplementary Appendix). Using our matching approach, we identified 71,003 hospice users (49.5%) in 2009 who were likely to have elected hospice in 2004 if they had died then (group G12009 in Fig. 1). The analytic comparison sample consisted of the remaining 2009 new hospice decedents (72,391 decedents, group G22009) and 2009 nonhospice decedents (216,658 decedents, group G32009) and their 2004 matches (groups G22004 and G32004 in Fig. 1). Decedent characteristics were very similar within matched groups, which indicated adequate covariate balance (Table 1). Among new hospice users and their 2004 nonhospice matched decedents (G22009 and G22004), the mean age at death was approximately 86 years, about one third were male, one quarter had a cancer diagnosis, close to 64% had Alzheimer’s disease or another form of dementia, and coexisting conditions like emphysema or chronic obstructive pulmonary disease, congestive heart failure, diabetes, and depression were common. Most of these hospice users (77%) had a DNR order, but DNH orders were uncommon (less than 10%). The largest differences were in the rates of diabetes (25.3% in 2004 vs. 29.4% in 2009) and depression (43.1% in 2004 vs. 48.4% in 2009). Nursing home decedents who did not use hospice in 2009 (group G32009) and their 2004 matches (group G32004) also shared similar characteristics, with the largest differences being in the rates of diabetes and depression.

n engl j med 372;19 nejm.org  May 7, 2015

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Changes in Medicare Costs with Hospice Care

Table 1. Comparison of Nursing Home Decedents According to Matching Group.* Characteristic

Hospice Group (Group 2)† G22004 (N = 72,391)

G22009 (N = 72,391)

Age at death (yr)

85.9

86.0

Male sex (%)

30.9

32.0

Nonwhite race (%)

Nonhospice Group (Group 3)†

Standardized Difference‡

G32004 (N = 216,658)

G32009 (N = 216,658)

Standardized Difference‡

1.2

85.2

85.4

2.1

2.4

36.0

37.4

2.9

8.9

10.3

4.6

11.0

12.3

4.1

Married (%)

23.1

24.2

2.7

25.4

26.6

2.7

Cancer and no dementia (%)

13.7

14.2

2.1

13.4

13.7

1.0

Cancer and dementia (%)

11.2

12.2

3.2

7.9

8.3

1.5

Dementia and no cancer (%)

52.2

52.1

−0.4

44.7

45.2

1.0

No cancer and no dementia (%)

22.9

21.5

−3.5

34.0

32.8

−2.7

Emphysema or chronic obstructive pulmonary disease (%)

30.5

32.2

3.6

35.1

36.3

2.5

Congestive heart failure (%)

46.6

44.5

−3.6

52.6

50.9

−3.5

Diabetes (%)

25.3

29.4

9.1

28.4

32.7

9.4

Arteriosclerotic heart disease (%)

15.4

15.6

0.7

16.1

16.9

2.0

Peripheral vascular disease (%)

13.0

13.4

1.1

13.5

13.9

1.2

Cerebrovascular accident (%)

22.5

19.7

−7.0

22.3

19.5

−7.0

Depression (%)

43.1

48.4

10.4

36.2

40.5

8.9

2.5

3.2

3.4

2.5

3.1

3.9

Asthma (%) Pneumonia (%)

9.5

9.1

−1.1

13.2

13.2

−0.2

Respiratory infection (%)

3.9

3.2

3.5

4.3

3.7

−3.1

Septicemia (%)

1.4

1.5

0.5

2.2

2.3

0.3

CPS score§

3.66

3.45

−11.4

3.29

3.09

−10.8

ADL score¶

22.0

21.8

−2.9

21.1

21.1

-0.5

ADL score worsening since last MDS (%)

27.3

25.8

−2.9

16.4

14.5

−5.3

Do-not-hospitalize orders (%)

8.1

9.2

4.1

6.5

7.4

3.8

Do-not-resuscitate orders (%)

77.0

77.4

0.8

66.9

66.4

−1.1

Nursing home stay 90 days (%)

80.5

80.3

−1.3

64.0

64.3

0.7

Time from last MDS to death (days)

34.6

34.1

−2.0

25.7

25.2

−1.7

No. of hospitalizations in the year before the year of death

0.72

0.76

3.8

0.68

0.72

3.3

Mean hospital length of stay (days)

2.20

2.17

−0.8

2.15

2.10

−1.3

* ADL denotes activities of daily living, CPS Cognitive Performance Scale, and MDS Minimum Data Set. † Group G22004 includes non–hospice users in 2004 considered likely to have used hospice if they had died in 2009. Group G22009 includes hospice users in 2009 considered likely not to have used hospice if they had died in 2004. Groups G32004 includes non–hospice users in 2004 who were considered likely to continue not to use hospice if they had died in 2009, and Group G32009 includes non–hospice users in 2009. Because matching was done with replacement, some persons in 2004 were selected as matches for more than one person in 2009. The number of unique persons in the two 2004 groups was 58,427 for the hospice group and 139,351 for the nonhospice group. The results in the table for the 2004 groups of matched persons are based on weighted individuals so that 2004 and 2009 have same matched sample size. See the Supplementary Appendix for further details. ‡ Standardized differences are defined as 100 × (mean1 – mean0) ÷ [(variance1 + variance0) ÷ 2]1/2, where 1 is the 2009 subgroup and 0 is the (matched) 2004 subgroup. The range is from −100 to 100. Some studies have used a standardized difference of less than 10 percentage points (in absolute value) to indicate a negligible difference,19 but no precise agreement exists.17 For characteristics expressed as percentages, standardized differences are given as percentage points. § The CPS score ranges from 0 (intact) to 6 (very severe impairment), with a score of 5 corresponding to a score of 5.1 on the Mini–Mental State Examination (range, 0 to 30;

Changes in Medicare costs with the growth of hospice care in nursing homes.

Nursing home residents' use of hospice has substantially increased. Whether this increase in hospice use reduces end-of-life expenditures is unknown...
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